CA Estate Planning Blog

Friday, June 27, 2014

Supreme Court rules that Inherited IRA's provide no asset protection in Bankruptcy

The Supreme Court has ruled in the case of Clark v. Rameker that inherited IRA's (i.e. and IRA/401k account that you receive from your parent's estate) do not have the same creditor protection as an employer funded 401k or a self funded IRA.  As a result, the funds held in an inherited IRA's can be attached by creditors in a bankruptcy proceeding.  

This ruling should result in an increase in the use of an IRA Beneficiary Trust as a vehicle in which the inherited IRA can reside for the lifetime of your heirs and while the funds are held within the trust, it is unavailable to your heir's creditors.  


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